Posted by
OffThePeak
12 yrs ago
Will the latest QE influence HK Property ?
I would have had a POLL, if that were possible on AX. I am interested in people's views.
A) Yes, definiitely
B) Maybe only a tiny bit
C) Not for more than a weekend
D) I really do not know
===
My own response would have been B, or C.
Frankly, I was a little surprise to see the comments about QE's possible impact on HK Property prices in the SCMP
Perhaps it was because of the jump of almost 3% in HK stock prices
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From the article, Henderson sees strong response - pg.B1
"The sales were good because many people have been seeking homes. And the new round of quantitative easing (from the US) prompted many people to buy flats immediately as they anticipate prices will increase further," - said a director from Midland Realty.
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QE means that money will continue to be worth less relative to goods and services. Accordingly, I would expect QE to be supportive of property prices BUT QE is not the only thing which could affect property prices in Hong Kong - future supply has at least the potential to trump QE. Events on the mainland could also have an impact. Availability of mortgage finance and interest rates are relevant, although not as much as they once were due to the high equity levels. Government measures such as SSD have been pretty ineffectual so far but who knows what they will come up with in the future. And there is always the possibility of a "black swan" such as a change in the peg.
A long winded way of saying that I don't know.
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Do you really think mortgage rates in HK can go any lower ?
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They were lower a few years ago - I am paying around 1% on most of my mortgages. HIBOR + 0.7 for the most part. If the banks have a combination of deposit build up and more limited lending opportunities, we could see them back to those levels because the banks will be better off doing business at those levels than not lending the money out at all.
I'm not making a prediction here - just pointing out the possibility.
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Yes, but that was during a time when liquidity was flooding into HK.
Unless we see that again, I do not expect to see thus ultra-low rates repeated here.
To get a sustained jump in HK Property prices, we might need to see a QE-related Buying panic, morphing into a run-away parabolic price move.
The HK govt has already taken another step, to head that off, and may have other measures up their sleeves.
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The government can drive down prices anytime it wants to - Tung Chee Hua did a good job by flooding the market with new supply. it could also stop people buying more than a certain number of properties, ban mortgage finance for non-owner occupied homes altogether etc etc
I'm not saying that they will or that any of these are good ideas, but the power is there.
On liquidity - if I had to take a position, I would expect less liquidity rather than more as people wake up to the negative impact of QE/inflation on the value of their bank deposits and start/continue chasing other assets.
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Of course QE doesn't put money in ordinary people's bank accounts. So why do people buy when governments print more money?
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"The government can drive down prices anytime it wants to - Tung Chee Hua did a good job by flooding the market with new supply"
Yeah, and LOOK WHAT HAPPENED ! - a 69% drop in prices.
If the government could engineer a nice 15-20% drop, I think they would like that. But how do you stop the slide, once it is underway ??
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A)
They were already on the way up even before the latest QE. This can only add to buyers confidence.
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